* Rio Tinto (L:RIO) Q3 iron ore shipments up 17 percent
* Uses 5 million tonnes of inventory
* Holds full-year production guidance at 340 mln/tonnes
(Adds details of inventory drawdown, analyst quote, market
comment)
By James Regan
SYDNEY, Oct 16 (Reuters) - Rio Tinto RIO.AX on Friday
posted a 17 percent rise in third-quarter iron ore shipments and
said it was on track to meet a full-year target of 340 million
tonnes, shrugging off risks from slower economic growth and
peaking steel output in China.
In a sign market conditions may be improving, the miner
dipped into its inventories - 4 million tonnes from its
Australian operations and 1 million from the Canadian business -
after production fell short of shipments.
Rio Tinto shipped 91.3 million tonnes over the quarter,
outstripping production of 86.1 million tonnes, data from the
company's quarterly production report showed.
"Clearly, the iron ore market is reasonably tight," said
Shaw Stockbroking mining analyst Peter O'Connor in a note to
clients.
At Rio Tinto's forecast shipping rate, the Anglo-Australian
miner would maintain a steady ranking with Vale VALE5.SA of
Brazil, while ahead of BHP Billiton BHP.AX BLT.L .
"Companies such as Rio Tinto are making a lot of money out
of iron ore because they can produce so much, so you would
expect production to keep going up," MineLife analyst Gavin
Wendt said.
A global glut of ore and falling Chinese steel demand have
dragged iron ore prices down sharply from a high of nearly $200
in 2011. The price is forecast to drop to $50 over the next two
years, a Reuters poll showed.
Iron ore miners have been on a drive to lower their iron ore
production costs to close to $10-$15 a tonne to keep ahead of
the deterioration in pricing.
Nev Power, chief executive of Australian iron ore miner
Fortescue Metals Group FMG.AX on Thursday said the market for
the steel-making commodity had returned to relative balance,
following the exit of some higher cost producers who found the
business unprofitable.
Rio Tinto iron ore division head Andrew Harding last month
forecast some 120 million tonnes of unprofitable iron ore would
dry up in 2015 - 45 million in China and the rest mostly from
mines in West Africa.
Iron ore stood at $53.20 per tonne on Friday, just above the
$50 average over 2016 and 2017, according to a median forecast
of 17 analysts polled by Reuters late last month.
Rio Tinto's iron ore production had taken a blow in the
first half of the year after interruptions due to two cyclones
hit near its Australian mines, forcing it to revise earlier
guidance down by 10 million tonnes this year.
(Editing by Ed Davies)